Choon Chong Tay, managing partner at Vertex Ventures China, said China-affiliated startups could still capture the U.S. market by anchoring daily operations, procurement and control of critical components in the city-state.
China-affiliated startups with “substantial content” in Singapore, where they control the chips that power these robots, may target the U.S. market, the Shanghai-based venture capitalist told CNBC on Tuesday.
The comments outline a playbook that investors with exposure to Chinese tech startups are increasingly weighing as tech competition between the United States and China intensifies. Investors and technology companies have poured huge sums into humanoid robots and other hard-tech sectors seen as the next frontier of automation.
In July, the Trump administration banned new foreign-made humanoid robots and other mobile robots from entering the United States on national security grounds, shutting down the world’s largest consumer market at a time when Chinese manufacturers have been leading the robotics charge.
International trade rules generally assign the origin of a product based on where it is substantially transformed, according to the U.S. government.
Vertex, backed by Singapore state investor Temasek, manages nearly $3 billion in US dollar- and yuan-denominated funds, and has backed Chinese startups spanning robotics, artificial intelligence, semiconductors and advanced manufacturing.
Its portfolio includes Unitree, autonomous driving chip maker Horizon Robotics, logistics robot supplier Geek+, surgical robot maker Edge Medical and photonic chip maker Lightelligence.
Tay is betting that economics will ultimately prevail over politics. American consumers and businesses want what Chinese factories produce cheaply, he said, and no domestic industry yet fills that gap. If a robot certified in Singapore is safe and priced appropriately, “what other reason do they have for not allowing us to export?”
The company’s early bets included bike-sharing company Mobike, acquired by Meituan in 2018 in a deal that Tay said returned about 10 times the initial investment.
The portfolio is now overwhelmingly hardware. For Tay, physical intelligence, referring to AI fused with robotics, is the defining thesis for the next decade, an industry that he believes will be ten times larger than the automotive sector.
Last month’s U.S. ban marks a milestone in U.S.-China decoupling of emerging robotics and could extend to the broader complex of physical AI, including smart vehicles and stationary robots, said Dien Wang, an equity analyst at Bernstein.
Beijing, however, has a counterinfluence through its dominance of rare earths used in humanoid actuators and motors, Wang said. “Controlling critical choke points could ultimately determine who wins the game.”
